They asked for the impossible.
This is their monkey paw.
The only thing impossible about a Final Fantasy 7 remake is for Square Enix to be fucking competent in the course of releasing a FF related project.
Making towns and cities in HD is not hard. Lots of games, from MMOs to RPGs to open world games, release with as much explorable space as Final Fantasy VII had. Don't forget, that game was really long because there was a lot of RPG combat in it, and a lot of story cutscenes, not because there was a never-matched-before-or-since amount of assets and shit in that game.
The real problem is that
Square Enix doesn't know how to fucking make video games anymore. That's why literally every single one of their major projects has fucking problems and is delayed for half a generation. Or more.
Because the real truth is that Square Enix is not a AAA game developer. They don't have their shit together enough for that. They still haven't successfully transitioned into the HD era, and the only reason they're still afloat is because of mobile, and the fact that the franchises and developers they absorbed from Eidos Interactive allow their western branch to actually fucking put out games on a regular basis.